US Equities Three days after the end of the second quarter the Dow Jones Industrial Average (“DJIA”) closed above 17,000 for the first time. While the US equity markets will bounce around a bit and even a meaningful correction may occur, current levels do not seem to be unreasonable from a valuation point of view.

We believe the US economy is still in the growth portion of an economic cycle and signs of continued recovery are easy to find. However, to continue to use the term recovery is a bit of a misnomer. Operating earnings for the S&P 500, a broader measure of corporate America than the DJIA, hit a high of just under $88 per share for calendar year 2006, before the economy began to melt. It then hit a low of around $49.50 per share for 2009. 2013 saw earnings of $107 per share and 2014 calendar year earnings for the S&P are projected to be in the neighborhood of $120 per share. A 21% improvement over the pre-recession high makes one think that the patient is out of recovery and has gotten back on a long-term growth trend.

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